Satisfaction Is Up, Customers Party Like It’s … 1994?

3
278

Share on LinkedIn

The conventional wisdom is that customers are more demanding and harder to satisfy than ever.
I’ve said so in my keynote speeches, so it must be true, right?

Maybe not.

The American Customer Satisfaction Index (ACSI) has been collecting data since 1994
across a wide range of industries. The “index” is a complicated model that attempts
to relate customers’ perceived quality, expectations and value to an composite measure
of overall customer satisfaction (ACSI), which is in turn linked to loyalty (primarily repurchase
likelihood). For more details on the methodology,
see the target=”blank”>ACSI web site.

As you can see from this chart, ACSI started at around 75 in 1994, then dropped like a stone
for a couple of years. But since then, the trend has been mainly up. Consumers rejoice!
We’re back where we started, 13 years later.


ACSI 1994 to Q2 2007

What’s significant about the ACSI is that it claims to be “predictive of both consumer
spending and stock market growth.” And, for the individual firm, ACSI data can predict “revenue and earnings growth.”

Now, last time I checked, statistics don’t prove a cause and effect relationship. When I spoke with Professor Claes Fornell, head of the ACSI at the
University of Michigan, he said that you can see the future impact of ACSI changes by “lagging” the indicator. Here’s an example that relates ACSI to earnings growth in SAP 500 companies.



Getting high ACSI scores appears to be a Good Thing, at least for big companies in the USA.
I asked Fornell if he could draw any general conclusions about what distinguishes the top ACSI performers.
His comments:

  • Buyer/seller fit: “Find a good dancing partner”
  • Quality of products and services: “Dissatisfied consumers can switch”
  • Price: “The pain of the purchase” (less impact than the first two factors)

In recent results, Fornell says that ACSI growth has leveled off, which doesn’t bode well for consumer spending.

And Detroit automakers are narrowing the gap with Asia automakers. Believe it or not, GM’s Buick is No. 2 with an ACSI of 86, with Toyota’s Lexus still leading the pack at 87.

In PCs, Dell is still in hell, while Apple has slipped a bit.

In portals and search engines, Yahoo! is making a comeback while Google slips back. Maybe not such a good time to buy GOOG at $500+ per share.

You can find out more about the results in the ACSI press release.

3 COMMENTS

  1. Readers should take into consideration that, according to correlation analysis done a few years ago by Fred Reichheld, though there might be some overall relationship between ACSI results and customer behavior, company-to-company he found 0.00 correlation between year-to-year changes in sales/revenue levels and year-to-year changes in individual ACSI satisfaction levels.

    Michael Lowenstein, PhD CMC
    Vice President and Senior Consultant
    Harris Interactive Loyalty

  2. Michael,

    More recent research disputes Reichheld’s finding of no correlation between ACSI and revenue growth. In fact, it appears that ACSI and NPS offer similar “predictive” capabilities.

    Bob Thompson, CustomerThink Corp.
    Blog: Unconventional Wisdom

  3. Michael, Bob

    As we all know, this is a complex area. In a recent paper on customer satisfaction models (which I can’t find easily without a lot of searching on Google Scholar), the authors made the very valid point that there are in fact a number of different models of customer satisfaction in addition to the ACSI one from the University of Michigan. And before Reicheld’s NPS model there was the uncannily similar Conversion Model developed by Rice & Hofmeier in South Africa in the 1990s.

    For me, the whole point is not the almost meaningless search for a single “silver bullet” measure, but instead, the need to understand how the business system works as a whole. Only when you understand the system as a whole do you have the required insights to choose, typically 8-10 measures, to measure the system’s general health.

    That is much harder of course than just picking up a best-selling book and applying its lessons without thinking. And let’s not even get started on a discussion of the Halo Effect in business books!

    Graham Hill
    Independent CRM Consultant
    Interim CRM Manager

ADD YOUR COMMENT

Please use comments to add value to the discussion. Maximum one link to an educational blog post or article. We will NOT PUBLISH brief comments like "good post," comments that mainly promote links, or comments with links to companies, products, or services.

Please enter your comment!
Please enter your name here